New study warns of US long-term debt problems

"The unsustainable nature of the federal government's current tax and spending policies presents lawmakers and the public with difficult choices," CBO said. "To put the federal budget on a sustainable path for the long term, lawmakers would have to make significant changes to tax and spending policies."

Obama inherited an economy in the worst recession since the Depression, which was largely responsible for the spike in the deficit above $1 trillion annually during his first term.

Most economists measure deficits and debt in relation to the size of the economy. By that measure, the debt would actually decline slightly under the current trajectory over the next five years, dropping from 73 percent of the economy now to 68 percent in 2018. But the ongoing retirement of the Baby Boom generation would contribute to rising debt after that, ultimately bringing the debt to 108 percent of GDP by 2038, with 8 percentage points of that figure caused by the economic drag the debt would have on the economy.

The report is one of a series by the agency and other budget watchdogs warning that spiraling long-term debt threatens to crowd out private investment, raise interest rates and limit Washington's ability to respond to a financial crisis.

The report comes as a divided Congress and Obama need to deal with two important problems: keeping the government funded beyond the Oct. 1 start of the 2014 budget year and permitting the government to borrow more money to pay those bills. Republicans hope to use the must-pass stopgap spending and debt limit legislation to derail "Obamacare" and force further spending curbs.

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, said: "In the weeks ahead, I hope we work together to heed CBO's warning. We must provide relief to the families we serve. We should start by delaying Obamacare and paying down the debt to help grow the economy."